LGBTQ ETF Could List In Q1, Perhaps Sooner

Financial data company LGBTQ Loyalty Holdings, Inc. LFAP plans to launch an exchange traded fund linked to the LGBTQ+ ESG100 Index in the first quarter of 2021, and perhaps sooner depending upon on market conditions.

What Happened: The Florida-based company planned to launch its ETF, which will trade under the ticker “LGBT” on the Nasdaq, earlier this year, but the coronavirus pandemic threw a wrench in those plans.

“Due to the unprecedented volatility of the financial markets caused by COVID-19 and the extreme market concerns this pandemic has created in the retail investing world since February of this year, our Board of Directors believe it is in the best interest of our shareholders and advocates to support the decision to launch in the first quarter of 2021 or sooner if market conditions change,” according to the firm.

“The company is in the process of finalizing all necessary steps to rebalance and reconstitute the index under the current methodology.”

Why It's Important: When LGBT comes to market, it will join a growing number of ETFs that extend the environmental, social, governance theme into more singular issues, including racial equality and human rights.

LGBT's underlying index “represents the top 100 hundred LGBTQ equality-driven U.S. companies from a universe of 500 publicly traded large-cap corporations. The companies are also screened to insure they meet our methodology ESG compliance, by a world leading provider of corporate governance and responsible investment,” according to LGBTQ Loyalty Holdings.

The firm's back-tested data indicate that a $10,000 investment in that index five years ago would have returned more than 88%, beating the S&P 500 by nearly 3,300 basis points over that period.

LGBTQ Loyalty board members include former Massachusetts Congressman Barney Frank and former Major League Baseball player Billy Bean.

What's Next: At the end of July, there was more than $100 billion allocated to ESG ETFs listed around the world. That's just a sliver of the $7 trillion in assets across all globally traded exchange traded products, indicating there's plenty of room for growth for virtuous ETFs.

As for LGBT, the new ETF will feature 100 components from 11 sectors, with technology and health care names combining for over 45% of the fund's weight.

Member firms are evaluated based on annual corporate LGBTQ data, ESG metrics, corporate performance and brand loyalty and awareness within the LGBTQ community.